Wright Express (WE)has a Capital Structure That's 30% Debt and 70

question 68

Multiple Choice

Wright Express (WE) has a capital structure that's 30% debt and 70% equity. The firm is considering a project that requires an investment of $2.6 million. To finance this project, WE plans to issue 10-year bonds with a coupon rate of 12% and a yield to investors of 12.4%. If the current risk-free rate is 7% and the expected market return is 14.5%, what is Wright's WACC if its beta is 1.2 and it is subject to a marginal tax rate of 40%.

• A)14.9%
• B)12.4%
• C)13.4%
• D)16.0%

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Definitions:

Committees

Groups of people appointed for a specific function, typically consisting of members of a larger group.

Qualitative Information

Data that describes qualities or characteristics that cannot be measured numerically, often gathered through observations, interviews, and surveys.

Coordination Across Departments

The harmonious alignment and collaboration between different organizational units to achieve common goals.

Coordination

The organization of different elements or activities in a manner that enables them to work together efficiently and effectively.